Why You Keep Getting Stopped Out

Why the stop is tight

The stop is a hypothesis test, not wiggle room. “One of the reasons I preach the tight stop is because we know WHY something should occur. Most people don’t know that. They’ll have to give it some wiggle room. It’s like, no you don’t. This SHOULD go. Why would this not go?… We have an unknown participant. I don’t want to find out who that is.” The setups that qualify are trades that should really go: if it doesn’t go immediately, the reason for the trade is already gone.

And it keeps you in the game while you learn. “I teach the one cent stop just so I know that I know what you’re doing. I’d rather have you frustrated than killed.”

Expect it

Rule: “Expect to get stopped out. That’s gonna happen. Just don’t cut it when it’s still good.” Rob’s answer never changed: “we get stopped out a lot, and that’s fine… Don’t worry about getting stopped out, because I’m putting you in positions that when they go, they really go.”

It is structural: “That’s why we keep the tight stops, because THREES EXIST.” And the stop-out is not wasted: “you’ll be building the triangle by getting stopped out, which makes the triangle bigger. That’s good.” A bigger broadening formation means bigger magnitude when the real break comes.

Do battle

Rob’s doctrine: “if we have every reason to believe something’s going to work and you get stopped out, go after it again when you get another setup. A lot of people won’t do that: ‘oh mine didn’t work, I gotta move on.’ I’m like, that’s still good, man. You just got caught in the micro try.”

On the re-break: “If you get stopped out and it goes back through, as soon as it goes back through, get back in. That’s just some punk triangling you out on the one. Get right back in.” The tight stop is designed for this: “We could stop you out right away, because that way it’s easier to get back in if it re-breaks.”

Fatigue is the enemy, so use hotkeys: “Let’s say you get stopped out twice, you’re exhausted. With hot keys you might take that third one and that might be the winner. It’s only oh-and-two, man. You get three strikes.”

Second mouse gets the cheese

How it plays out: “‘It broke and then it came back in and I got stopped out and then it really went.’ That’s why you do battle. It just triangled a few guys out, then came back in and triangled the other guys out who said ‘ha ha, false breakout, I’m going to short it’, and then really breaks out the second time. Second mouse gets the cheese.”

When you may loosen

The only exception: “You can give things some room as long as everything’s hunky-dory everywhere else” (full timeframe continuity and magnitude still in your favor): “If you got longer term signals in there you don’t have to cut the whole thing… you don’t have to be over-managing things either.”

Always: stops only move closer to price, never away; see stop losses.

Never: loosening because you keep getting hit. If room is the only thing keeping you in, the problem is selection, not the stop: why you keep losing trades.

Related: Stop Losses · Trades That Should Really Go · Why You Keep Losing Trades
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